By Jane Nelson Director, CSR Initiative, Harvard Kennedy School and Zahid Torres-Rahman, Founder and Director, Business Fights Poverty
As people from around the world start to focus on how to implement the Sustainable Development Goals–the ambitious vision for ending poverty and protecting our planet– they are exploring new ways of engaging and partnering with each other to achieve greater scale and systemic impact. The 2030 Agenda for Sustainable Development which sets out the SDGs envisions a “revitalized global partnership for sustainable development”.
The year 2015 will go down in history as a defining period in our shared leadership responsibility to agree a common agenda for ending extreme poverty and protecting our planet for this and future generations. The UN General Assembly’s adoption of the SDGs and the outcomes of the Financing for Development and Climate Change conferences will set the global agenda for driving more inclusive, sustainable and resilient growth for decades to come. Success will be difficult to achieve. It will require outstanding leadership and accountability from leaders in government, business and civil society, and new models of dialogue and partnership among them. This report focuses on opportunities to increase engagement between the UN and business, drawing on the experiences and lessons of the UN SDG Fund and its Private Sector Advisory Group (PSAG).
From design to implementation of the SDGs
The UN Secretary-General Ban Ki-moon addressed the Private Sector Forum on 26 September 2015, the day after the UN General Assembly adopted the 2030 Sustainable Development Agenda. His call to action was clear and compelling:
“The Sustainable Development Goals were forged from the most inclusive policy dialogue we have ever organised. Governments must take the lead in living up to their pledges. At the same time, I am counting on the private sector to drive success. Now is the time to mobilise the global business community as never before. The case is clear. Realising the Sustainable Development Goals will improve the environment for doing business and building markets. Trillions of dollars in public and private funds are to be redirected towards the SDGs, creating huge opportunities for responsible companies to deliver solutions.”
Attention must now be focused on implementation - on harnessing the different capabilities and interests of business and building effective partnerships to drive the delivery of measurable results. What are these capabilities and interests? And how can we increase both the quantity and quality of partnerships, especially between the UN and business? This report aims to address these two core questions. It draws specifically on examples of business engagement in development from a relatively small, but diverse group of 13 companies that constitute the Private Sector Advisory Group of the UN’s SDG Fund, but the models of engagement, challenges, lessons learned and good practices are relevant much more broadly.
Engagement between the UN and business
Engagement between the UN and the business community is not new. Indeed, the United Nations system has been working with the private sector in different ways since its creation 70 years ago. Engagement has ranged from traditional consultative and procurement arrangements, which have been in place since the founding of the UN in 1945, to new types of cooperation in the past couple of decades. These have ranged from the development and promotion of global norms and responsible business standards to the joint design, financing and implementation of projects on the ground.
In addition to most UN agencies and funds now having a dedicated team or teams to support engagement with the private sector, the creation of the UN Global Compact in 2000 and the unanimous endorsement of the UN Guiding Principles on Business and Human Rights by the UN Human Rights Council in 2011, have been crucial milestones in the evolving engagement between the UN and business. At the operational and implementation level, the United Nations Development Programme (UNDP) has played an increasingly important role in engaging with local and international companies and their associations.
In particular, UNDP has supported public policies and government capacity building to help achieve broad-based private sector development with a focus on strengthening local business ecosystems and companies, including the small and medium-sized businesses that create the majority of jobs in most economies. It has also established a variety of innovative programmes to promote responsible business practices and to mobilise financial, technological and managerial resources from domestic and foreign companies that directly support key UN goals. The establishment of the SDG Fund in 2014 is a key example.
Embarking on a new era of cooperation
Although engagement between the UN and business is not new, what is new is the central role that leaders from the private sector have played, both individually and collectively, in providing substantive input to the development of the 17 SDGs and their 169 targets, as well as the Financing for Development process and the global Climate Change agenda.
In addition, there has been a substantial increase in the number of companies that are able to measurably demonstrate the transformative impact that their technologies, products, services and business models have had on improving the lives of low-income producers, consumers and workers. These range from the ground-breaking implications of digitisation and the information and communications technology revolution to breakthroughs in health and agricultural productivity due to advances in materials and life sciences and new financing and business models.
At the same time that more experienced companies are beginning to measure and increase their investments in business-driven approaches that address international development goals, a growing number of new companies and businessled coalitions are making explicit commitments to support specific SDGs and projects. And many more private sector leaders and investors are starting to advocate publicly for their governments to take greater leadership in achieving the SDGs.
Equally, more leaders in government and civil society are publicly recognising the important role of the private sector in sustainable development. They are calling on business leaders to be more proactive in getting engaged and in making targeted investments to achieve the SDGs. They are also calling on business leaders to be more transparent and accountable for the development impact of their business activities, both negative and positive.
Of course major challenges remain. The beneficial development impact of many private sector investments often fails to reach the scale that is needed due to a combination of market failures, governance gaps and other bottlenecks.3 Even the best-intentioned individual investments, let alone philanthropic contributions, while valuable and necessary, are not sufficient on their own to achieve lasting and more systemic results in terms of tackling poverty and achieving other SDGs.
More seriously, exposés of the negative impacts of certain companies and private investments continue to dominate many news headlines. These range from human rights abuses and tragic shortfalls in worker health and safety to environmental degradation, tax avoidance and corruption scandals. On-going mistrust, lack of mutual awareness and understanding, and inadequate skills, financing and governance structures remain major obstacles to greater public-private partnerships and UN-business engagement.
Despite the on-going challenges that must be tackled, there is increasingly common agreement among leaders in different sectors around three common imperatives for action:
• Multi-stakeholder partnerships among governments, companies and civil society organisations will be central for setting common policy agendas, mobilising necessary resources, and ensuring shared accountability.
• Private sector investments and market-based solutions, as well as philanthropic contributions and blended finance or hybrid models, will be needed to achieve scale and sustained impact in many sectors.
• Country-level leadership, prioritisation and ownership of outcomes will be essential for driving transformative or systemic change. Governments must lead, but the business community in each country, both domestic and foreign, as well as civil society have a vital role to play.
The imperative for action
The following report outlines the business and development cases for increased UN-business engagement – the shared imperative for action – before focusing on a practical framework for business engagement in development and a proposed agenda for action by the UN and business leaders.
The business imperative for engaging in the SDGs is based both on the value to the business and the values of the business. Tackling sustainable development challenges helps to identify and mitigate material risks and costs for many companies and strengthen their relationships, licence to operate and longer-term resilience. It can also create opportunities for innovation and for accessing new producers, consumers and growth markets. In short, it can help companies both to protect value or manage risks as well as create value or enhance opportunities for the company and its stakeholders. Beyond this, engagement in the SDGs can help companies to articulate and demonstrate the deeper values of progressive business leaders and their employees, investors and customers as active citizens in their own right.
The imperative for the UN and other governmental and non-governmental organisations focused on development to engage with domestic and foreign companies also rests of the dual principles of identifying and mitigating risks and negative impact, and identifying and mobilising resources to achieve positive impact. There is a strong imperative to work with companies and business associations to agree on and spread responsible business practices and standards in areas such as human rights, labour, the environment and anti-corruption. At the same time, there is the untapped potential to mobilise and leverage private financial investments, technological, product and business model innovations, and networks to help achieve the SDGs. The need to tap this private sector potential is greater than ever in an era of public sector resource constraints and fundamental demographic, technological and ecosystem transformations.
The framework for action
The framework for action that we introduce in this report builds on several decades of work by the authors and our organisations. We argue that business can engage in development most effectively and strategically through its core business investments and activities. In every industry sector, it is these core business investments and activities that offer the greatest potential for achieving sustained results at scale. At the same time, we recognize the value of strategic corporate philanthropy and social investments, and the role that companies play, for good and bad, in public policy advocacy. And importantly, we highlight the emergence of innovative hybrid models or blended finance models that combine either business and philanthropic resources and objectives and/or public and private resources and objectives.
We also illustrate how companies can engage in addressing development goals either individually through their own business activities, through specific project-based partnerships with other companies or with public and civil society partners, or through multi-stakeholder platforms that bring together a larger number of actors to achieve more systemic change through policy advocacy or strengthening broader ecosystems.
We make a strong case that to be effective and transformative in supporting the SDGs, business must play to its strengths. Its partners in the UN and elsewhere must understand and respect what these strengths are. This means looking to core business models, technologies, products and services, and unleashing a new wave of innovation and creativity. It means becoming more strategic in how philanthropic capital is deployed, aligning more closely to core business and leveraging competencies and assets beyond cash. And it means thinking about how to drive scale and more systemic change through multi-stakeholder collaboration and policy advocacy
The agenda for action
The report concludes with a clear agenda for action: Inspire-Connect-Equip. This outlines what the UN can do to motivate and mobilise many more companies to get actively engaged in supporting the SDGs, how it can simplify and facilitate the process of business engagement with UN agencies and other delivery partners, especially at the country level, and how it can help to build and share knowledge and skills related to business engagement in development and new models of partnership and impact measurement.
In summary, the report aims to provide a business perspective on some of the key ways in which companies can support the SDGs, and to highlight examples of what works, what does not and what more can be done by the UN to harness the full potential of what business can bring. It draws primarily on the perspectives of the 13 member companies of the SDG Fund’s Private Sector Advisory Group, but also distils insights from the extensive analysis that has been done on the theory and practice of business and sustainable development, including by our own organisations. We hope that the report will serve as a useful resource for those who see the SDGs as a fresh opportunity to engage business as a true partner in development. There is much work to be done by all leaders in all sectors and all countries.
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